China farms the world to feed a ravenous economy

The Associated Press | Sunday, May 4, 2008

CHALEUNSOUK, Laos: The rice fields that blanketed this remote mountain village for generations are gone. In their place rise neat rows of young rubber trees -- their sap destined for China.

All 60 families in this dirt-poor, mud-caked village of gaunt men and hunched women are now growing rubber, like thousands of others across the rugged mountains of northern Laos. They hope in coming years to reap huge profits from the tremendous demand for rubber just across the frontier in China.

As Beijing scrambles to feed its galloping economy, it has already scoured the world for mining and logging concessions. Now it is turning to crops to feed its people and industries. Chinese enterprises are snapping up vast tracts of land abroad and forging contract farming deals.

This quest raises both hope and criticism.

Laos' communist regime touts rubber as a miracle crop that will help lift the country from the ranks of the world's poorest nations. China is expected to consume a third of the world's rubber by 2020, become its largest car market and put 200 million vehicles on the road.

But some Laotian farmers are losing their ancestral lands or being forced to become wage workers on what were once their fields. Chinese companies are accused of getting rubber concessions from officials and not compensating farmers. They are also accused of violating laws, human rights and the environment, under conditions described by experts as "anarchic."

"The Chinese companies in the north are a bunch of thugs," says Charles Alton, a consultant in agronomy for international agencies in Laos. However, Alton says, the "unpoliced, unregulated situation" in northern Laos is ripe for exploitation.

The Chinese deny or don't comment on such allegations.

"I haven't heard of the bad behavior of Chinese companies abroad, but Chinese companies which intend to expand abroad must know it is important to have a good relationship with the local people," says Ju Hongzhen, president of the China Rubber Industry Association.

China's State Forestry Administration last year issued guidelines for Chinese firms running overseas plantations. The U.N. Food and Agriculture Organization is also scrambling to put out guidelines for a fast-moving global scenario.

From Southeast Asia to Africa, the Chinese are farming oil palm, eucalyptus, teak, corn, cassava, sugar cane, rubber and other crops. As in Laos, the industrial-size farms are variously viewed as an ecological nightmare or a big step toward slashing poverty.

In the Democratic Republic of the Congo, a Chinese telecommunications giant, ZTE International, has bought more than 7 million acres of forest to plant oil palms. In Zimbabwe, state-owned China International Water and Electric Corp. reportedly received rights from the government to farm 250,000 acres (101,174 hectares) of corn in the south.

Indonesia is moving to develop biofuel plantations with The China National Overseas Oil Corporation. The London-based Environmental Investigation Agency, an advocacy group, believes other deals are in the works, often through proxy companies because of long-running anti-Chinese sentiment in the country. The group says the project would destroy natural forest.

In Myanmar, rubber concessions have gone to at least two Chinese companies, Ho Nan Ching and Yunnan Hongyu. Refugees fleeing Myanmar's military regime say troops are forcibly evicting farmers to make way for rubber plantations, including some run by Chinese enterprises.

A Chinese-Cambodian joint venture, Pheapimex-Wuzhishan, converted land of the Phong tribal people into a tree plantation 20 times larger than allowed by law in Cambodia, according to the environmental group Global Witness. The group says the concession in Mondulkiri province encroached on grazing grounds, destroyed sacred sites and used toxic herbicides.

Another Chinese enterprise in Kratie province circumvented the size restriction by registering as three separate companies, Global Witness says.

In Beijing, the Commerce Ministry declined to answer written questions about China's global reach in agriculture or operations of Chinese enterprises abroad except in Laos, where it said companies had a "very strong awareness for environmental protection." Local residents welcome the new developments because incomes have increased by as much as five times, a ministry statement said.

However, the central government in Laos last May ordered a moratorium on concessions over 100 hectares (247 acres), in part because it had become clear many were covers for logging.

Entire hills in the north have been scalped of green cover, and rubber trees penetrate into the tangled natural forests. Also being cleared are secondary forests, sources of medicinal herbs and edible plants that tribal people have depended on for generations.

The government edict against concessions appears to have been ignored in the north, where local officials often a make the rules in an environment of corruption, ill-defined land laws, vague agreements and conflicting agencies.

"The Chinese companies do everything in their power to take advantage but they are also taken advantage of. The system is corrupt and there are loopholes and sometimes it works in their favor and sometimes against them," says Weiyi Shi, an American economist who recently completed a study on the rubber industry.

The study found that when the China-Lao Ruifeng Rubber Company moved in, the frontier village of Changee lost most of its rice fields and grazing land and its burial grounds were desecrated. The pleas of villagers got no result and some protesters were reportedly held at gunpoint, with the Chinese using coercion through local authorities.

A company executive, Zheng Fengqi, contacted in China, denied there were any protests on the concession granted by the military.

"The local people also liked the project because they could earn more money and lead a life of better quality," he says.

Many independent farmers do indeed embrace the Chinese with enthusiasm, hoping to replicate an earlier rubber bonanza in China's neighboring Yunnan province. Some have personal contacts, even relatives, living in China and set up informal business arrangements with them.

Some villagers even torch their surrounding forests, hoping the Chinese will come in and offer them rubber trees.

"They see what is in China, where people have gone from wooden houses to concrete, walking or bikes to motorbikes and cars, buffaloes to hand tractors and kerosene to electricity," says Michael Dwyer, a natural resources researcher from the University of California, Berkeley. "They want the same."

Farmers can hope to take home up to US$3,000 from a hectare of rubber -- roughly seven times more than from growing rice. But it will be another six to seven years before latex begins to ooze from most trees in the north.

"If the price is high we will prosper," says Chan Phoung, one of the villagers at Chaleunsouk, inhabited by the Khmu ethnic minority. "If it's low we don't know what we will do."

A friend adds: "It's like raising a pig for profit -- it may die before you can sell it at the market."

Associated Press Writers Michelle Faul in Johannesburg, South Africa, Alan Clendenning in Sao Paulo, Brazil, Ian James in Caracas, Venezuela, Monte Hayes in Lima, Peru, Angus Shaw in Harare, Zimbabwe, and Ker Munthit in Phnom Penh, Cambodia, contributed to this report.

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